CONTRACT MCQS DA Flashcards
Your client is an IT company specialising in the repair of computer hardware. They entered into a contract with a supplier of microchips. The supplier delivered the microchips in three batches. Two of the batches were fine, but the client alleges that the third was defective. The client therefore rejected this third batch after inspecting it but kept the other two. In addition, the client is claiming damages for loss of profit as a result of the defective third batch, because the client could not fulfil an order in time despite making arrangements to get a third consignment of chips from another supplier.
A. The client was right to partially reject the microchips but cannot then claim damages as the contract is still in effect.
B. The client cannot partially reject goods that have been delivered. Either the whole consignment must be rejected, or it must be accepted.
C. The client had the right to partially reject the goods and, as there has been a breach of contract, also has a right to damages.
D. The client only has a right to damages.
E. The client is only entitled to not pay for the proportion of the consignment that has been rejected.
The client had the right to partially reject the goods and, as there has been a breach of contract, also has a right to damages.
A seller of oranges entered into a contract with a grocery store to deliver two crates of oranges. The buyer would pay for the oranges on delivery. The oranges would be delivered the next morning. However, before delivery, the buyer found another supplier that would deliver the oranges for a cheaper price. They did not cancel the contract with the original seller, but when they came to deliver the oranges, the buyer refused to accept the delivery.
A. The seller is entitled to the price of oranges only.
B. The seller is entitled to the price of the oranges and damages.
C. The seller is not entitled to anything – the court will not assist a party that has entered into a bad bargain.
D. The seller is not entitled to anything; the buyer had the right to enter into another contract.
E. The seller is entitled to damages for non-acceptance.
E. The seller is entitled to damages for non-acceptance.
Answer: E. The two parties have entered into a contract: the seller to deliver the goods, the buyer to accept and receive (provided the goods comply with the terms of the contract). There has been no breach by the seller; instead, the buyer has breached the contract by refusing to receive the oranges. Note that the oranges have not been delivered by the seller and therefore the buyer has not received them and used them – as such, we do not have an action for price under s49 SoGA. Instead, the seller does have a right to damages for non-acceptance under s50 SoGA.
A woman was having problems with her car. She decided to take it to the local garage. She deposited the car there, to pay and collect later once the car was fixed. However, when she was in the reception area of the garage after she had deposited her car, the woman saw across the road that a rival garage was offering a discount. She took her car out of the garage to go to the other one.
Has the woman breached a contract with the original garage?
A. No. The garage had not started work on the car, so no consideration was given.
B. No. the woman, as a consumer, has the right to unilaterally revoke her contract.
C. Yes. The exchange of promises as given in the contract is sufficient consideration to form a binding contract between the woman and the garage.
D. No. The garage and the woman did not exchange executed consideration.
E. Yes. The car temporarily belongs, in common law, to the garage while they fix it.
C. Yes. The exchange of promises as given in the contract is sufficient consideration to form a binding contract between the woman and the garage.
Your client is a publisher. The ink supplier they have used in the past has gone out of business and they are looking for a new one. A rival publisher, who the client is friendly with, recommended an ink supplier based in Doncaster. The rival publisher said that the supplier has always done a good job for them, and the ink is really good quality. Your client enters into the contract based on this recommendation. However, the quality of the ink is really low and not up to the standard expected.
Advise the client as to their remedies.
A. The client can sue the rival publisher under a collateral contract.
B. The client cannot sue the rival publisher as no collateral contract is formed and cannot sue the ink supplier, as there is no contract there either.
C. The client can sue both the rival publisher and the ink supplier.
D. The client can only sue the ink supplier for breach of contract (ink not up to the quality expected); there is no collateral contract between the client and the rival publisher.
E. The client can sue the ink supplier for breach of contract but not the rival publisher as they were only acting as agent for the supplier.
To make a collateral contract, we need to see evidence of a benefit received by the rival publisher, such as commission or payment of some kind. If the rival publisher were to receive a benefit, then there would be an exchange of consideration: the rival publisher gets money from the supplier in exchange for making a promise to the client that the ink is good quality. We don’t have that consideration here. But the client can sue the supplier – the ink is simply poor quality (sue under implied terms of Sales of Goods Act 1979).
D. The client can only sue the ink supplier for breach of contract (ink not up to the quality expected); there is no collateral contract between the client and the rival publisher.
A local theatre company hired a top actor to perform in a small play. It has advertised the fact that this actor will be appearing. A week before the play, the actor did not attend rehearsals. As the opening night approached, the local theatre company judged that the cast was not completely ready as a result. It cancelled the play, terminated its contract with the actor and is pursuing him for damages.
Was the company right to terminate the contract?
A. Yes – the actor has breached a warranty.
B. No, the actor has only breached a warranty.
C. The courts would need to assess if the implied terms breached under this contract were conditions or warranties.
D. No. The local theatre company is only entitled to reliance loss.
E. Yes. By failing to rehearse, the actor has likely breached a condition of his contract.
Yes. By failing to rehearse, the actor has likely breached a condition of his contract.
Answer: E. A condition is a clause that goes to the root of the contract; without it, the contract is unworkable. Failing to come to rehearsals made this contract unworkable – the actor and the cast couldn’t perform on the night. This is therefore a breach of condition. A breach of condition gives the innocent party the right to repudiate the contract, meaning terminate it, and sue for damages.
A man had a contract with a candy floss company. Under the contract, the candy floss company paid rent to the man to use his circus premises to sell candy floss to people who came to his circus. However, during the Covid pandemic, the man had to stop performances, and nobody came to the circus. The candy floss company still had to pay rent during this period under the contract. The man therefore agreed not to charge rent, and the candy floss company stopped paying. Once lockdown ended and customers started coming back to the circus, the man demanded the full rent that was owed during lockdown and full rent going forward.
Advise the candy floss company.
A. It has to pay the full rent as the man suffered a loss of revenue during the pandemic too, meaning estoppel cannot apply.
B. It only has to pay the rent that was due during the lockdown, not after, as there is a valid estoppel from that point on.
C. There is no estoppel because there is no reliance. It has to pay the man the rent due during lockdown and full rent going forwards.
D. It has to pay full rent owed because part payment and accepting less is not binding.
E. It only has to pay full rent going forwards as estoppel operated for the rent due under lockdown.
E. It only has to pay full rent going forwards as estoppel operated for the rent due under lockdown.
Answer: E. Estoppel applies. The man made a promise to suspend his full contractual rights, and it would be harsh for him to go back on that because during lockdown, The candy floss company had no income. They relied on the man’s promise by paying less. The man cannot demand full rent during lockdown. He can however now demand full rent going forwards, because lockdown has ended and so the conditions that caused his promise in the first place no longer apply.
Your client has contracted with a decorator to redecorate her café. The client wants the new café to be opened in the second week of September so that she can get good profits in the lead-up to Christmas. The decorator begins the work but informs the client that they cannot finish unless they receive extra money upfront. They ask for an extra £2,000 in the second week of August. The client pays immediately, wanting to make sure that the job is completed. The painters finish the work on time and ask for the remainder of the contract price. The client does not pay the full remainder arguing that they owe her £2,000 back.
What is the client’s legal position?
A. The client has been a victim of economic duress. She should rescind and claim damages.
B. There is no valid consideration here as the painters gave nothing in return for the extra payment.
C. A claim for economic duress is unlikely to succeed. The client must pay the remainder of the contract price, as the practical benefit rule is likely to apply.
D. The client does not need to pay the rest of the contract price as the decorators have in fact breached their contract.
E. The client has been a victim of undue influence and should rescind to get the £2,000 back
Answer: C. Economic duress is unlikely to succeed – it is unlikely illegitimate pressure will apply. The client had plenty of time to get new painters, did not protest, and did not consider her actions fully. She must therefore pay the remaining full price. Also, the £2,000 variation is valid because the consideration is the practical benefit of finishing on time.
An individual buys an electric car from a second-hand, local car dealership. The individual wants the car for long journeys and informed the dealership of this. He is a retired electric car mechanic and has a good understanding of electric car models. The dealership sold him the specific model, selling it as a robust car that can handle all kinds of journeys. It turns out on using the car that it is limited in its journey distance.
What remedy, if any, is the man entitled to?
A. None.
B. Damages for breach of condition.
C. Right of rejection and refund under the Consumer Rights Act 2015.
D. Damages for breach of condition under section 14 of the Sale of Goods Act 1979.
E. Rescission and damages.
A. None.
Correct
Answer: A. This is not likely to be a misrepresentation. On the facts, the dealership has not made any representation about the journey distance of the car specifically; what’s more, what they have said is unlikely to be actionable misrepresentation and will more likely be sales talk. The individual will want to try and rely on remedies under the Consumer Rights Act 2015, in particular for a breach of section 10: goods satisfactory for a particular purpose. But subsection 4 states that this will not apply where it is “unreasonable” for the buyer to rely on the trader; it is unreasonable if the buyer has some special knowledge likely over and above that of a salesman at a second-hand local car dealership.
Two merchants entered into a contract to buy and sell avocados. The avocados were being shipped from South America at the time the contract was being made. The buyer promised to pay for them on delivery. Unbeknown to both parties, the avocados perished on the ship in the middle of the sea at the time they entered into the contract. The seller now wants to sue the buyer to pay damages after the buyer has refused to accept the goods.
Advise the seller.
A. The seller should make an action for price (debt claim) against the buyer for the price of the avocados.
B. The contract is voidable for misrepresentation. The seller should make a claim for rescission.
C. The contract is void for unilateral mistake. The seller can sue the buyer for damages.
D. The contract is void for common mistake. The buyer does not have to pay any money. The seller should see if they can sue the supplier for damages.
E. The contract is void for common mistake. The seller should sue the buyer for damages.
The contract is void for common mistake. The buyer does not have to pay any money. The seller should see if they can sue the supplier for damages.
Answer: D. This is res extincta: the goods perished at the time the contract was made unknown to both parties. There is therefore no formation of contract and so the buyer is not compelled to pay for the avocados. The best the seller can do is pursue the supplier for damages for failing to take care of the avocados.
You are acting for a delivery company that has just delivered a consignment of fruit and vegetables to the local grocers in return for £6,500. The grocers is refusing to pay for the produce.
What claim should the delivery company make against the grocers?
A. Expectation loss.
B. Cost of cure.
C. Diminution in value.
D. Debt claim – action for price.
E. Loss of profit.
D. Debt claim – action for price
Answer: D. This is a simple debt claim. The client has delivered the goods and the grocer refuses to pay. At this stage, on the facts, we don’t know if the goods are not up to standard. If they weren’t, then the grocer would make a counterclaim for breach of contract. Under s49 Sale of Goods Act 1979, the seller has the right to make a claim for delivered unpaid goods. This is a debt claim so is not subject to restrictions like mitigation, causation and remoteness.
Your client bought a new car on finance from a dealership. The car salesman said deliberately and knowing it was false that the car was a brand-new model from a Korean car manufacturing company that was top of the range and could last for miles. Only two days after using the car, your client discovered that this was untrue: the car was a fake and the engine used was a moped engine. The car salesman assigned the financing loan to a bank. The bank had no knowledge of the fraud.
What remedy would you advise the client to seek?
A. Damages provided that they are reasonably foreseeable.
B. Rescission only.
C. Damages flowing from the breach of contract.
D. Rescission and damages.
E. All consequential damages flowing as a result of the misrepresentation; rescission is not possible on the facts.
E. All consequential damages flowing as a result of the misrepresentation; rescission is not possible on the facts.
Answer: E. Rescission will not be available here as a bona fide third party has possession of the financing – the car cannot be transferred back to the original party. As this is fraudulent misrepresentation, there is another remedy: damages. All damages flowing from the representation are recoverable and are not subject to remoteness.
A woman buys some toys from a shop on Christmas in time for unwrapping on Christmas day. However, when the toys were unwrapped and played with by the woman’s children, it turns out they were shoddy and of poor quality.
What action can the woman take in respect of the toys?
A. None, because they have been opened and taken out of the packaging by the children.
B. She can exercise her short-term right to reject the goods, receive a refund, have the shop collect the goods and the shop must bear the costs of return.
C. She can exercise her short-term right to reject the goods and receive a refund.
D. She can exercise her short-term right to reject the goods, receive a refund, and claim damages for any loss of amenity as this is a “pleasure contract”.
E. She can exercise her short-term right to reject the goods, receive a refund, but must physically return the item to the shop in order to do so.
B. She can exercise her short-term right to reject the goods, receive a refund, have the shop collect the goods and the shop must bear the costs of return.
Answer: B. Under the Consumer Rights Act, a consumer has a short-term right to reject if the goods are of poor quality. This is a 30-day period and the clock starts when the toys are bought from the shop. The more difficult bit is about the return of the goods. Under the CRA, the consumer must make the goods available for the trader to collect or return the goods as stipulated under the contract (by returning them to the shop). However, on the facts, we have no terms of delivery. So, the woman does have a choice: she can either have the shop collect the toys, or return them to the shop, but to say she has to return them to the shop is inaccurate.
Your client is a collector of antique clocks. After a long search, they finally found a clock made by the famous clockmaker Robert Poll in the 18th century, which is very rare. The client has ordered this clock from an antique dealer. However, the dealer doesn’t want to deliver the clock because they think it makes a very nice ornamental feature in their shop.
What step should the client take?
A. Sue for damages under expectation interest, with the loss of profit being the value of the clock if the client had received it.
B. Claim for loss of profit or reasonable expenses on a quantum meruit basis.
C. Make a claim for specific performance under the Sale of Goods Act 1979.
D. There has been a total failure of consideration, so the client should claim for the money back.
E. Make a claim for damages for loss of amenity.
Answer: C. Normally, damages would be an appropriate remedy, whether that be for loss of profit, restitution of any money deposited or even mental distress. But here we have a unique and rare item. The Sales of Goods Act allows for a specific performance remedy in such a scenario where a buyer has paid for goods, but the seller doesn’t want to deliver them anymore, and such goods are unique, rare or valuable.
Your client has contracted with a website builder to build it a new website. The website builder developed the underlying code for the website but then abandoned the project. The client passed the code on to another builder to complete the website. The website builder is now claiming money for their work from your client.
How would you best advise your client in respect of any payment due to the website builder?
A. The website builder is entitled to the cost of the code as they have substantially performed.
B. The website builder is entitled to the cost of the code because there was a mutual waiver of obligations.
C. The website builder is entitled to the cost of producing the code as the client has voluntarily accepted partial performance.
D. The website builder is entitled to the cost of the code as the obligation is divisible.
E. The website builder is entitled to nothing as they have not performed their entire obligations under the contract.
Answer: C. By using the code, the client has voluntarily accepted the work done. Notice the client had a choice here, unlike if it was building works. It may be however that, because of the website’s builder’s breach of contract, the payment for any code is offset by any damages suffered by the client (for example in order to get the new developer and any loss of earnings). But, nevertheless, the builder has done some work which has been used by the client, so they are entitled to payment for that.
A design company ordered a roll of fabric in the colour “fluorescent pink” from a specialist fabric company. However, on arrival, the fabric turned out to be “wavey pink”, which is darker.
What can the design company do?
A. Repudiate the contract as a breach of condition and claim damages for any consequential loss.
B. Although they would be entitled to repudiate the contract, the breach is so slight they are in fact only entitled to damages for breach of warranty.
C. They can sue for damages under a breach of warranty.
D. Nothing – there is no substantial breach of contract and they have not suffered any loss.
E. As a result of section 15A of the Sale of Goods Act 1979, they can only sue for breach of warranty.
A. Repudiate the contract as a breach of condition and claim damages for any consequential loss
Answer: A. This is a breach of section 13 of the Sale of Goods Act 1979 – sale by description. The goods are not as described. Section 13 is a condition. A breach of condition allows the innocent party to repudiate the contract and claim damages for any loss. However, there is an exemption: s15A states that if the breach is so slight so that to treat it as a breach of condition would be unreasonable, it would only be a breach of warranty. However, this is a design contract with a fabric company – getting the right colour is absolutely fundamental to the contract.
